Three Economic Perspectives on Post - 2012 Global Climate Policy

This thesis presents three economic perspectives to moving forward a global climate agreement for post-2012. The first part develops a grading system for assessing thirteen proposals for post-2012 climate policy. The grades are based on four criteria: environmental effectiveness, cost effectiveness, distributional considerations and institutional feasibility. The grades are analyzed using two complementary methods: principal component and cluster analysis. It is shown that the higher the number of policy instruments a proposal comprises, the more difficult might be its implementation. Proposals which include a meaningful effort by the U.S. tend to fail in environmental effectiveness and institutional feasibility. Three proposals out of thirteen may be considered as suitable candidates for post-2012 climate policy. The second part defines feasible global climate policy scenarios by means of a participatory approach. Stakeholders' views are classified into three scenarios for post-2012 climate policy. Further, three points obtain a wide consensus among stakeholders: (i) 2013 is the most likely starting point for the next climate agreement, (ii) flexibility mechanisms will most probably be pursued, and (iii) technology and financial transfers to developing countries are likely to be used as incentives for these countries to undertake a more meaningful climate policy. The type of target for the United States largely determined the type of scenario the stakeholders envisaged for the post-2012 climate regime. The third part analyzes the incentives and the desirable features of transfer schemes for financing mitigation activities in developing countries. These desirable features are individually rational, budget-balanced, anti-incentives for free-riding and misrepresentation. Two alternative transfer schemes are tested. The analysis is further refined by the inclusion of the role of pivotal countries in the global climate policy. It was shown that there is a trade-off between transfers which avoid misrepresentation of countries and transfers that are budget-balanced and individually rational.

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